No land for foreigners?

One of the main points of contention brought up by Jacob Zuma’s State of the Nation speech – for anyone who actually heard it – was his shock announcement that government will restrict land ownership by foreign nationals. Government’s hardened stance on property rights for foreign nationals is not new, but it has shed some light on a topic often branded as “political talk.” Rural Development and Land Affairs Minister Gugile Nkwinti said in a statement yesterday that this will apply to farms and exclude residential property.

“We’re talking about arable land,” Nkwinti said in an SABC interview, “We’re not talking about property people own in residential areas.”

Foreign nationals will be limited to leaseholds of 30 to 50 years and not be permitted to buy land. MoneyWeb reports that South Africa’s regulatory environment is already seen to be hostile towards foreign investors, although commentators have raised doubts as to the feasibility of this option.

The plan

The Presidency released a statement on Saturday defining foreign nationals as “non-citizens as well as juristic persons whose dominant shareholder or controller is a foreign controlled enterprise, entity or interest. Hence not all immigrants to South Africa will be excluded from land ownership.”

The story doesn’t end there though as the government also proposes putting a ceiling on local land ownership.  The Regulation of Land Holdings Bill limits locals to a maximum of 12,000 hectares of land saying, “If any single individual owns above that limit, the government would buy the excess land and redistribute it.”

The Presidency does however concede: “It is recognised that this cannot apply retrospectively without constitutional infringements and as such those who have already acquired freehold would not have their tenure changed by the passing of the proposed law.”

It is not a done deal yet, as the Presidency adds: “The Bill will be sent to Cabinet for approval, then undergo a public consultation process before being constitutionality tested in Parliament and then sent to the President for assent.”

Once the Bill has been passed and is operational, a process will be established for the compulsory disclosure of land holdings by foreign nationals.

“These disclosures will be in terms of race, nationality, gender, extent of land owned and its use. The process will be managed through a Land Commission,” states the Presidency.

Opposition

The law is expected to be heavily contested, as Neil Gopal Chief executive of the South African Property Owners Association (for one) says that the Bill contradicts section 25 in the Bill of Rights, which mentions the right to property. “No law may permit arbitrary deprivation of property,”

Anthea Jeffery, Head of special research at the South African Institute of Race Relations explains that the country’s Constitution protects the property rights of all citizens.

“Among these are the many black Africans who have bought some 2 million hectares of farm land since 1991 or the 7.6 million black Africans who now own their own homes,” Jeffery says. 

And investors?

Dawie Roodt, Efficient Group director and chief economist adds that this announcement has many European investors concerned about South African property rights.

“Private property rights are just the beginning of something much more important. What we are seeing is not an attack on property rights, but an attack on individual rights,” Roodt says.


By Jenni McCann

Sources

Bloomberg
MoneyWeb